Your Company’s Energy Data Is an Untapped Resource

Most companies are unprepared for the emerging revolution in predictive energy analytics. In fact, many readers’ eyes will have already glazed over at the preceding sentence, with the natural initial reaction that energy-related data isn’t relevant to their jobs.

But what happens when every single light fixture in all of your company’s facilities becomes a networked mini-computer with an array of sensors? Who at your company will be put in charge of turning buildings operations from a cost center to a revenue center? These examples are not hypothetical capabilities; these are now real options for companies. And yet few corporate managers are asking such questions, much less taking advantage.

Cost Savings

Chances are, energy-related spending has a significant impact on your company’s profitability. There are over five million commercial and industrial facilities in the U.S. alone, according to the US. Energy Information Administration, with a combined annual energy cost of over $200 billion. The U.S. EPA estimates that around 30% of that energy is used inefficiently or unnecessarily. And many companies also face additional energy-related costs from their commercial vehicles, of which there are over 12 million in operation in the U.S. according to IHS, incurring fuel costs in the billions annually.

So there are some big potential savings out there to be gained, but for most companies the responsibility for capturing them is relegated to facilities and fleet managers. Furthermore, many of these managers are focused more on productivity and safety goals than energy savings, nor are they allocated budgets to acquire new energy-saving systems even when paybacks would be compelling. And of course, few such managers have a background in information technology.

But as computing and networking costs have fallen over the past few decades, it has opened up a host of new ways that data and IT could be applied to drive significant cost savings in company-owned buildings and vehicle fleets. Startups like First Fuel and Retroficiency are able to perform “virtual energy audits” by combining energy meter data with other basic data about a building (age, location, etc.) to analyze and identify potential energy savings opportunities. Many Fortune 500 companies have also invested in “energy dashboards” such as those offered by Gridium and EnerNOC, among numerous others, which give them an ongoing look at where energy is being consumed in their buildings, and thus predict ways to reduce usage.

Many companies use telematics (IT for vehicles) to track their fleets for safety and operational purposes, and some startups are now using these capabilities to also help drive fuel savings. XLHybrids, for instance, not only retrofits delivery vehicles with hybrid drivetrains for direct fuel savings, they also provide remote analysis to help predict better driving patterns to further reduce fuel consumption. Transportation giants like FedEx and UPS already use software-based optimization of fleet routes with cost savings in mind.

Operational Improvements

The benefits of tracking energy usage aren’t limited just to energy savings. Because energy usage is an integral part of all corporate facilities and operations, the data can be repurposed for other operational improvements.

Take lighting, for example. Boston-based Digital Lumens offers fixtures for commercial and industrial buildings that take advantage of the inherent controllability of solid-state lighting, by embedding intelligence and sensors and adjusting consumption based upon daylight levels, occupancy, and other inputs to drive energy savings of 90% or more. But along the way to achieving these direct energy cost reductions, many of their customers find additional benefits from having a network of data-gathering mini-computers all over their facilities. For example, manufacturers and warehouse operators who’ve installed Digital Lumens systems have the ability to generate “heat maps” showing which locations in their facilities get the most traffic, which allows the facilities managers to reposition equipment or goods so that less time is wasted by workers moving around unnecessarily. And now retailers are starting to leverage the same information to better position higher-margin product where traffic is highest within their stores.

Another use of energy data is in predictive maintenance. When a critical piece of equipment breaks in a commercial setting, it can have a significant financial impact. If the refrigerator compressor breaks in a restaurant, for instance, it can force a halt to operations of the entire facility. But often, long before such equipment fully stops working, the early signs of a problem can be discerned in its energy usage signal. Startups like Powerhouse Dynamics and Panoramic Power are finding that their small-commercial customers get as much value out of such fault-detection and predictive maintenance as the get out of the overall energy monitoring services their systems are designed to provide.

Don’t have a capital budget for energy savings projects? Well, other companies like SCIenergy and Noesis are now using predictive analytics to help underwrite energy-efficiency loans and even more creative financing which helps companies capture savings from day one, in some cases even guaranteeing system performance.

New Sources of Revenue

What really has the potential to radically change how corporate managers view predictive energy analytics, however, is how it can be used to turn existing “cost centers” into sources of new, high-margin revenue.

Electric utilities must keep the grid balanced at all times, and this challenge is only growing more acute. They can expensively purchase power from other sources at times of high demand, but it’s often better for them to avoid such peaks by reducing consumption when needed. Thus, many such utilities are willing to pay commercial customers to participate in so-called “demand response” or “frequency regulation” programs in which customers periodically reduce their electricity usage so the utility doesn’t have to bring another power plant online.

Imagine a big box retail store in the future: It has solar panels on the roof. A large-scale battery in the basement. Plus an intelligent load-control software system that deploys the battery’s power as needed, and also adjusts the air conditioning, lighting, and other energy-consuming devices in the building in incremental ways so that when such loads are shifted around minute to minute, no one in the building feels any impact on comfort or operations. The combination of these systems would not only reduce the facility’s bill from the local electric utility, it would also enable the building to automatically participate in that utility’s demand response program and generate revenue.

Does this sound like a pipe dream? Seattle-based Powerit Solutions offers such intelligent automation today, and they already control 800 megawatts of load in the marketplace.

Unfortunately, most corporations aren’t making the necessary investments in energy data analytics — they’re not providing budgets or the cross-functional teams to identify the available cost savings, much less the new revenue opportunities. To be done right, integrating such solutions into the enterprise requires not just knowledge about buildings, but also IT and financial leadership. The effective “facilities management” team of the future will have all of these capabilities. Leading companies across all industries will have to start viewing energy data analytics as a core shareholder value activity, prioritizing it accordingly.

(Disclosure: Black Coral Capital, where I am a partner, is an investor in Digital Lumens, Noesis, and Powerit.)

Rob Day is a partner with Black Coral Capital, a private equity firm focused on natural resource-related innovations.